Tips for Tipped Employees

It’s not easy to run a restaurant. Economic studies of the restaurant business have found that new restaurants fail often, with about 17 percent of them closing their doors before their first anniversary. That’s not nearly as bad as the commonly cited but erroneous figure of 90 percent, but still daunting for anyone who wants to open one.

The New Jersey Restaurant and Hospitality Association is a trade group dedicated to helping restaurateurs make it past that first year and beyond. The organization represents an industry that claims about 300,000 employees in New Jersey, making it the largest private employer.

The NJRHA is headed by Marilou Halvorsen (U.S. 1, March 8, 2017), a veteran of the hospitality industry who started her career at Radio City Music Hall, where she was executive assistant to the vice president of special events. Halvorsen will speak at the Princeton Chamber of Commerce Wednesday, August 16, from 7:30 to 9:30 a.m. at the Nassau Club of Princeton. Tickets are $40, $25 for members. For more information, visit www.princetonchamber.org or call 609-924-1776.

The NJRHA doesn’t just lobby on behalf of the industry. It also provides training and education for restaurant owners and employees. The NJHRA website, njrha.org, even offers a guide to help waiters, waitresses, and other tipped employees navigate the unique labor laws that govern how they are paid:

Many employers and employees have questions about how wage and hour rules apply to tipped employees. The NJRA is dedicated to making sure that both employers and employees know their rights and responsibilities. The NJRA has issued the following questions and answers on its website to help people know their rights:

What is the minimum wage for tipped employees? Tipped employees in the state of New Jersey must make the same minimum wage as everyone else: $8.25 for every hour worked in a work week up to 40 hours. Federal law requires that employers pay no less than $2.13 for all such hours. If your tips (over the required $2.13) do not amount to at least $8.25 per hour, your employer must make up the difference in your paycheck. This is a requirement and not optional. Tipped employees are not second-class citizens, and the law entitles you to the same minimum wage as everyone else.

What if I make more than the minimum wage in tips alone? Regardless of how much you make in tips, your employer is required to pay $2.13 per hour. Even if you make much more than $8.25 per hour, your employer must pay you an additional $2.13 per hour. For example, if you work a six-hour day and receive $90 in tips (including cash that you take home), that would mean that you actually made $15 per hour in tips. Even so, your employer must pay you an additional $2.13 per hour in a paycheck, bringing your real gross hourly wage up to $17.13 per hour.

The government takes seven deductions from every employee in America: state and federal income taxes, as well as deductions for Family Leave, Social Security, Unemployment, Disability, and Medicare. As tipped employees can take home most of their cash tips, these deductions can actually exceed the $2.13 per hour additional that your employer pays you by check. In such cases, the entire $2.13 per hour would go to the government to satisfy these deductions. The check will be zero because the funds were transferred from your employer to the government. Tipped employees’ income is subject to the same withholding as non-tipped employees.

What if I make less than the minimum wage even after tips? You’re entitled to the same minimum wage as everyone else. Your employer must make up the difference. For example, if you work a six-hour day and make only $30 in tips (including any cash that you took home from work), your employer must pay you a wage amount that equals the minimum wage. But in this case, since your tips only equaled $5 per hour, your employer must increase its wage contribution from $2.13 to $3.25 per hour to make sure that you make the same $8.25 minimum wage as everyone else.

As a tipped employee, am I entitled to a premium payment for overtime? Yes. Whenever you work more than 40 hours in an established work week, all hours worked in excess of 40 must be compensated at the overtime pay rate like any other non-tipped employee. Overtime must be paid at 1.5 times the regular rate for all hours worked in excess of 40. The minimum overtime rate must not be less than $12.38.

What do I do if my employer is not following these rules and under-paying me? You’re entitled to the same remedies as everyone else. Of course, in fairness to everybody, it’s always the best policy to talk to your employer first. Perhaps this was a mistake, you read your pay stub wrong, or they misunderstood the law. But if you’re unable to resolve the problem to your satisfaction, here’s how to report wage and hour violations to either the Federal or State Labor Departments (Wage & Hour):

Federal: The U.S. Department of Labor’s Wage and Hour Division (WHD) is responsible for administering and enforcing some of the nation’s most important worker protection laws. WHD is committed to ensuring that workers in this country are paid properly for all the hours they work, regardless of immigration status.

If you have questions or concerns, you can contact 1-866-487-9243 or visit www.wagehour.dol.gov. You will be directed to the nearest WHD office for assistance. There are over 200 WHD offices throughout the country with trained professionals to help you.

If your employer owes you wages, you can file a complaint with New Jersey’s Department of Labor under the Wage Payment Law or the Wage and Hour Law. If the amount claimed is less than $10,000, or you are willing to accept a maximum award of $10,000 and forfeit anything above that amount, NJ DOL can issue a decision and an award.

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